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Phillips Carbon mulls flotation

Calcutta, July 27: The RP Goenka group-controlled Phillips Carbon Black (PCBL) may tap the market to raise funds to finance its first overseas venture in Vietnam. The company has signed a memorandum of understanding with Vietnam National Chemical Corporation (Vinachem) for a greenfield joint venture company.

“We will pick up a majority stakeholding of 80 per cent in the joint venture, while Vinachem will own the remaining 20 per cent,” said Ashok Goyal, managing director of Phillips Carbon.

“Vinachem has shortlisted a few Vietnamese companies as equity partners in the joint venture. There will be at least three of them in the proposed joint venture together holding a 20 per cent stake,” Goyal added. He, however, declined to name the companies.

He said the total investment for the project would be $45 million. The structure of the equity capital of the joint venture and other details will be finalised after Vinachem comes out with a feasibility report in September.

Phillips Carbon will float a special purpose vehicle to route its investment in the joint venture in Vietnam. “The SPV will be floated in a country where it will get the maximum tax benefit. However, we have not yet identified the country where the SPV will be registered,” said Altaf Jiwani, chief financial officer of Phillips Carbon.

Jiwani also said the company was exploring all possibilities to raise funds for investment in the joint venture. “We are not even ruling out an equity issue,” said Jiwani. “But a final decision will be taken only in September after we get the feasibility report of the project and the equity structure and other investment details of the company are finalised,” he added.

With the availability of abundant natural rubber in Vietnam, the country is emerging as an attractive location for tyre manufacturers — the principal buyers of carbon black.

The Phillips Carbon facility will come up at Ba Ria-vung Tau, a southern coastal province in Vietnam. “An eight-hectare (20-acre) plot has already been identified for the proposed plant,” Goyal said.

Phillips Carbon is setting up a greenfield unit at Mundra and a brownfield plant at Kochi.

The company has already completed the financial closure for Rs 350 crore in these two projects. Of this, equity capital comprise Rs 140 crore and the rest has been arranged from banks and financial institutions. The equity component is partly funded by internal accruals and partly by promoters who subscribed to a Rs 44.7-crore preferential issue in March.

The company is also installing a 30mw co-generation power plant at its Durgapur unit at an investment of Rs 115 crore. “The project will be completed by the last quarter of the current financial year,” Goyal said.

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